Cross-border VAT: guide, customs aspects and sanctions. Manage the import of your boat correctly.
Cross-border VAT: what is it?
L'IVA all'importazione è l'imposta riscossa dalle autorità doganali al momento dell'importazione di beni extra UE nel territorio dell'UE. Il calcolo viene effettuato sul valore dei beni importati, aumentato dell'importo dei diritti doganali dovuti e delle spese di inoltro fino al luogo di destinazione all'interno dell'UE.
Cross-border VAT is the tax collected by customs authorities at the time of importing goods from non-EU countries into the EU territory. The calculation is based on the value of the imported goods, increased by the amount of customs duties owed and forwarding costs to the destination within the EU.
Cross-border VAT: Legal classification
Border right vs. internal tax
Cross-border VAT plays a significant role within the fiscal and customs system.
Legislative Decree 141/2024 introduced a substantial change in the legal classification of import VAT, fully including it among border duties rather than treating it as an internal tax.
However, this new classification conflicts with EU and national case law (see Supreme Court of Cassation, Joint Sections No. 18284/2024), which instead considers it an internal tax, thereby excluding it from customs obligations.
The European Court of Justice has ruled that import VAT and domestic VAT constitute the same tax, and the first cannot be classified as a customs duty. Although it is collected in a manner similar to customs duties, import VAT differs from such duties in terms of the timing of collection and calculation, as customs duties are paid and calculated at the moment of customs clearance.
Furthermore, the Joint Sections of the Italian Supreme Court of Cassation, in Judgment No. 18284 of July 4, 2024, confirmed that "the distinction between customs duties and import VAT means that, for the purpose of determining penalties, the respective amounts of the evaded duties cannot be combined" (Cass. Joint Sections, July 4, 2024, No. 18284).
Cross-border VAT: Criminal Sanctioning System
New provisions on customs smuggling
The Legislative Decree 141/2024 has also introduced changes to the crime of customs smuggling and amended Legislative Decree 231/2001, introducing new offenses related to excise duties and tightening the penalties already in place for smuggling. Specifically, the following have been introduced:
Smuggling due to failure to declare, which punishes with a fine ranging from 100% to 200% of the due border duties anyone who, in order to introduce, circulate in customs territory, or remove goods from customs supervision, omits the customs declaration for non-EU goods or the export of EU goods.
Smuggling due to false declaration, which punishes with a fine—also ranging from 100% to 200% of the due border duties, wrongly collected or improperly requested for refund—anyone who falsely declares the quality, quantity, origin, or value of goods or any other information necessary for tariff application and duty calculation.
The particularity of these criminal offenses lies in the fact that, following the reform, the intentional evasion of import VAT (equivalent to the intentional evasion of customs duties) now constitutes the crime of customs smuggling due to its classification as border duties.
All cases of smuggling carry criminal relevance when:
- The evaded border duties exceed €10,000.00.
- Aggravating circumstances are present.
- The intentional evasion involves import VAT.
Other cases of smuggling are governed by Articles 80 and 86 of Legislative Decree 141/2024.
As previously mentioned, Legislative Decree 141/2024, known for the amendments made to the existing customs regulatory framework to align it with the EU provisions of Regulation (EU) 952/2013, has redefined the crime of smuggling, introduced new offenses, and increased penalties.
When the amount of border duties due exceeds €10,000,000 or if an aggravating circumstance applies, the customs offense becomes criminally relevant, leading to an increase in proceedings for such crimes. This is because, in determining whether the threshold has been exceeded, both customs duties and import VAT are taken into account.
Thus, all cases of smuggling that exceed this threshold or are committed under aggravating circumstances are criminally relevant.
If such smuggling offenses occur, the Public Prosecutor, after receiving notice of the crime, will register the names of the suspects in the crime report register, initiating criminal proceedings. It is important to note that these offenses require intent, and, in all such cases, the existence of this subjective element must be proven.
Cross-border VAT: Legal Services for Nautical Imports
The international law firm Arnone&Sicomo has an internal department of maritime and navigation law that offers:
- Management of procedures for importing boats from outside the EU;
- Assistance in the event of seizure for failure to pay VAT;
- Support in customs and criminal proceedings for customs smuggling.
Have you had your boat seized and are you accused of failure to pay VAT on import? Have you been accused of customs smuggling? Contact us.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
